You may or may not know, but during the early 1960's, the ten largest sub-Saharan economies, such as Congo,Gabon,Ivory Coast,Madagascar, Mauritius,Mozambique, S.Africa, and Swaziland, on average had higher income level. Ranging from $1120 for Ivory coast, to $2800 for Mauritius in terms of per capital income. However, the growth rate of real GDP per capital, these few sub-Saharan Africans experienced, did not last long, economic growth performed negatively from 1970's and so on. Despite the Africans negative performance, The east Asians grew rapidly. GDP growth rates, such as Taiwan grew at an average rate of 6.7%, S.Korea 6.1, and, Singapore 6.1%, over a period of 40 years. That doesn't mean, some didn't experience double digit growth, weather that's true or not, we will let the history books rule.
Before we get in depth and details, there are few questions, some may have never heard of, or even did, but didn't clearly understood the answers. Therefore, we glanced at few history books, to see if there is any clarification. It isn't our foolish opinion, that's expressed in these pages. Rather its what the historians recorded of what happened in the past, that we are re writing. Enough with our confession, lets dive into whats important.
What is The Developmental State?
The basic reason to have an economy is to raise the individual consumer standard of living, say the westerners or the Anglo-American Model. The East-Asians argue with a big No! and say its to increase the collective national strength of society. From these two differences, we can derive or at least say there are different value systems culturally between the east and the west. Comparing the two, the East Asians seem to be collectivist or group oriented whereas in the western model, economic development means, "more". If people have more choice, more leisure, more wealth, more opportunity to pursue happiness, society as a whole will be a success. For our purpose, we are only comparing two different models, not that there aren't any other economic systems, but maybe so far neither has been labeled completely as failed theories.
S.Korea, A Model For Ethiopia?
S. Korea's first concrete economic development strategy was launched when Park Chung Hee, assumed political power following the Coup d'etat in 1961, and inaugurated the first five year plan in 1962. Before Park, the S.Korean government was led by the first president, Rhee who clearly lacked a vision for his war torn nation, mainly because he was pre occupied with taking over N. Korea by force. We are assuming Ethiopian troops, sent by the late emperor Hailesellase, under U.N mandate to help the S.Koreans, keep the N.Koreans at bay, are at the emperors palace receiving honors for their service. Never the less, directly after the Korean war, the S.Korean economy was heavily dependent on U.S aid. During Rhee's presidency (1953-60), Poor S. Koreans received $2.3 Billion in aid, 85% of it coming from the U.S.A. In other words, the aid accounted for 10% of S.Korea's economic activity. In April 1960, Rhee's government was ousted by student-led popular uprising, and was replaced by Chang Myun. Even though Mr Chang, made economic development numero uno, ten months later, a group of graduates from the Korean military academy, led by non other than Park, toppled Changs government.
Why Maestro Park Chose, " The Developmental State Mindset"
A look at Parks background may give us a clue, to understand why he may have thought N.Korea to be a cancer, rather than the solution. Instead he focused on the unity of the remainder of S.Koreans, and adopted, the state-led-developmental mindset. After graduating from teacher training school, Park was admitted to the Japanese Imperial military academy in Manchuria. Manchuria is a historical name given to a large geographic region in northeast Asia. Depending on the definition of its extent, Manchuria falls entirely within China, or is sometimes divided between China and Russia. Since he graduated top of his class, he was sent to Tokyo, for further training at the Tokyo Military Academy. After completing his studies, in the Japanese capital city, he was sent back to Manchuria, and served in the Japanese Imperial Army, Until the Japanese gave up and surrendered to allied forces in 1945.
During his service in Manchuria, Mr. Park observed, how the Japanese Army ran the Manchurian economy, supposedly it was according to a model developed in Japan. The Japanese theory was in line with the the model in which the state directs and utilizes enterprise to serve national economic development by controlling finance. When Mr. Park assumed political power, the clock was ticking, unless there is a dramatic shift in economic policy, he realized he won't stay in power neither. Therefore he first setup an Economic Planning Board (EPB), with powers to draft economic plans, control national budget, and implementation of plans. The Ministry of trade (MOT) was responsible for export promotion, import control, industrial development plans, Investment application, and trade licensing. The Ministry of finance (MOF) was responsible for regulating financial institutions.
To achieve his vision for S.Korea, dear Park chose to be partners with the Japanese. Despite the opposition of the public, S. Korea normalized diplomatic relations with Japan in 1965. Many S.Koreans, remembering the brutal years of Japanese colonial period, and fearing renewed dominance by Japan, the public protested against the normalization of relations between the two countries. Parks government had couple of reasons, and was determined to proceed and ruthlessly repressed protesters What were the reasons, you may wonder? Well after relations were normalized, S.Korea received a capital infusion of $800 million, from Japan. Most importantly, S. Korean enterprises took over the production of Japanese goods, and machinery used for lower value- added, and labor intensive production, as Japanese businesses moved into higher value-added, and more capital-intensive production.
From 1965-1973, S.Korea economic growth averaged 9.5%, and exports grew 44%. Manufactured exports rose from 8% of final demand in 1963 to 22% in 1966 and 40% by 1973. This economic growth miracle seemed to be working well, as the economy grew at a rapid pace. However that didn't come without unintended consequences for S.Korea or anyone else that adapted development first, democracy second. Collectively called the east Asian tigers had the following in common.
Before we get in depth and details, there are few questions, some may have never heard of, or even did, but didn't clearly understood the answers. Therefore, we glanced at few history books, to see if there is any clarification. It isn't our foolish opinion, that's expressed in these pages. Rather its what the historians recorded of what happened in the past, that we are re writing. Enough with our confession, lets dive into whats important.
What is The Developmental State?
The basic reason to have an economy is to raise the individual consumer standard of living, say the westerners or the Anglo-American Model. The East-Asians argue with a big No! and say its to increase the collective national strength of society. From these two differences, we can derive or at least say there are different value systems culturally between the east and the west. Comparing the two, the East Asians seem to be collectivist or group oriented whereas in the western model, economic development means, "more". If people have more choice, more leisure, more wealth, more opportunity to pursue happiness, society as a whole will be a success. For our purpose, we are only comparing two different models, not that there aren't any other economic systems, but maybe so far neither has been labeled completely as failed theories.
S.Korea, A Model For Ethiopia?
S. Korea's first concrete economic development strategy was launched when Park Chung Hee, assumed political power following the Coup d'etat in 1961, and inaugurated the first five year plan in 1962. Before Park, the S.Korean government was led by the first president, Rhee who clearly lacked a vision for his war torn nation, mainly because he was pre occupied with taking over N. Korea by force. We are assuming Ethiopian troops, sent by the late emperor Hailesellase, under U.N mandate to help the S.Koreans, keep the N.Koreans at bay, are at the emperors palace receiving honors for their service. Never the less, directly after the Korean war, the S.Korean economy was heavily dependent on U.S aid. During Rhee's presidency (1953-60), Poor S. Koreans received $2.3 Billion in aid, 85% of it coming from the U.S.A. In other words, the aid accounted for 10% of S.Korea's economic activity. In April 1960, Rhee's government was ousted by student-led popular uprising, and was replaced by Chang Myun. Even though Mr Chang, made economic development numero uno, ten months later, a group of graduates from the Korean military academy, led by non other than Park, toppled Changs government.
Why Maestro Park Chose, " The Developmental State Mindset"
A look at Parks background may give us a clue, to understand why he may have thought N.Korea to be a cancer, rather than the solution. Instead he focused on the unity of the remainder of S.Koreans, and adopted, the state-led-developmental mindset. After graduating from teacher training school, Park was admitted to the Japanese Imperial military academy in Manchuria. Manchuria is a historical name given to a large geographic region in northeast Asia. Depending on the definition of its extent, Manchuria falls entirely within China, or is sometimes divided between China and Russia. Since he graduated top of his class, he was sent to Tokyo, for further training at the Tokyo Military Academy. After completing his studies, in the Japanese capital city, he was sent back to Manchuria, and served in the Japanese Imperial Army, Until the Japanese gave up and surrendered to allied forces in 1945.
During his service in Manchuria, Mr. Park observed, how the Japanese Army ran the Manchurian economy, supposedly it was according to a model developed in Japan. The Japanese theory was in line with the the model in which the state directs and utilizes enterprise to serve national economic development by controlling finance. When Mr. Park assumed political power, the clock was ticking, unless there is a dramatic shift in economic policy, he realized he won't stay in power neither. Therefore he first setup an Economic Planning Board (EPB), with powers to draft economic plans, control national budget, and implementation of plans. The Ministry of trade (MOT) was responsible for export promotion, import control, industrial development plans, Investment application, and trade licensing. The Ministry of finance (MOF) was responsible for regulating financial institutions.
To achieve his vision for S.Korea, dear Park chose to be partners with the Japanese. Despite the opposition of the public, S. Korea normalized diplomatic relations with Japan in 1965. Many S.Koreans, remembering the brutal years of Japanese colonial period, and fearing renewed dominance by Japan, the public protested against the normalization of relations between the two countries. Parks government had couple of reasons, and was determined to proceed and ruthlessly repressed protesters What were the reasons, you may wonder? Well after relations were normalized, S.Korea received a capital infusion of $800 million, from Japan. Most importantly, S. Korean enterprises took over the production of Japanese goods, and machinery used for lower value- added, and labor intensive production, as Japanese businesses moved into higher value-added, and more capital-intensive production.
From 1965-1973, S.Korea economic growth averaged 9.5%, and exports grew 44%. Manufactured exports rose from 8% of final demand in 1963 to 22% in 1966 and 40% by 1973. This economic growth miracle seemed to be working well, as the economy grew at a rapid pace. However that didn't come without unintended consequences for S.Korea or anyone else that adapted development first, democracy second. Collectively called the east Asian tigers had the following in common.
- Authoritarian leadership, with a clear vision, but almost zero respect for democracy. Journalist were more often in prison rather than editing editorials. The remaining journalist that feared for their life had to present the questions first, before heads of state can be interviewed. Yes dear reader we aren't making this up, this was done in the East Asian countries, when they were emerging as the tigers.
- Ethnic divisions were common issues in these countries, taking Malaysia as an example, politics was dominated by ethnic consideration. In the first ever election, a coalition of three ethnic parties won the first election. The United Malay National Organization (UMNO), The Malayan Chinese Association (MCA), and the Malayan Indian Congress (MIC)
- Border Division, Singapore was once the same country as Malaysia, but politics didn't allow them to stick together. Today Singapore is the richest state when measured per capita income. Half a century ago, they couldn't even imagine comparing themselves to Sub-Sahara African economies. Also Singapore was ruled by one man for a very long time. We encourage you to find out for yourself. http://internetwriter62.hubpages.com/hub/Singapores-Transformation-from-a-small-Struggling-Island-Nation-to-a-Thriving-Metropolis.
- Economic Policy of the east Asians was that the state directs capital, where it seems beneficial for society, and both the private sector and the state implement the project. The Chinese called it, capitalism with Chinese characteristic, the rest of us call it the Developmental State.
Regards,
Eskinder Haile
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